Free Essays on An Analysis Of The 2001 Recession

An Economic Analysis of the 2001-2002 Recession The recession is commonly defined as â€Å"Two or more consecutive quarters of a shrinking economy.† During the month of March 2001, the world’s largest economy - The United States of America - began experiencing a downturn, leading into a recession. (â€Å"Economists call it recession†). In comparing previous recessions that occurred, it appears that similar patterns exist also in the 2001-2002 recession. Such patterns start with increasing interest rates by the Federal Reserve Open Committee, proceeded by growth slowdowns, the fall of real output, and eventually the rise in unemployment. According to Robert E. Scott and Christian Weller, â€Å"further increases in real short - term interest rates herald a slowdown.† Further evidence that suggests a recession was on the horizon was information released from the National Bureau of Economic Research that states, â€Å"A peak marks the end of an expansion and the beginning of a recession.†(The B usiness Cycle Peak, March 2001.) During an expansion, however the economy is experiencing normalcy, and during this period the economy is between a trough and peak. The National Bureau of Economic Research, however, defines a recession as, â€Å" a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and the wholesale-retail trade.† (the Business Cycle Peak.) Therefore, when a peak date was determined in March 2001 it marked the end of an expansion that began in March 1991, and hence the beginning of a recession. This marked the end of the longest economic expansion that lasted ten years of rising incomes and employment. Because the longest economic expansion came to an end this led to lower incomes and higher unemployment rates. Employers thus required fewer employees which leads to fewer employed people and a higher unemployment rate. Recessio... Free Essays on An Analysis Of The 2001 Recession Free Essays on An Analysis Of The 2001 Recession An Economic Analysis of the 2001-2002 Recession The recession is commonly defined as â€Å"Two or more consecutive quarters of a shrinking economy.† During the month of March 2001, the world’s largest economy - The United States of America - began experiencing a downturn, leading into a recession. (â€Å"Economists call it recession†). In comparing previous recessions that occurred, it appears that similar patterns exist also in the 2001-2002 recession. Such patterns start with increasing interest rates by the Federal Reserve Open Committee, proceeded by growth slowdowns, the fall of real output, and eventually the rise in unemployment. According to Robert E. Scott and Christian Weller, â€Å"further increases in real short - term interest rates herald a slowdown.† Further evidence that suggests a recession was on the horizon was information released from the National Bureau of Economic Research that states, â€Å"A peak marks the end of an expansion and the beginning of a recession.†(The B usiness Cycle Peak, March 2001.) During an expansion, however the economy is experiencing normalcy, and during this period the economy is between a trough and peak. The National Bureau of Economic Research, however, defines a recession as, â€Å" a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and the wholesale-retail trade.† (the Business Cycle Peak.) Therefore, when a peak date was determined in March 2001 it marked the end of an expansion that began in March 1991, and hence the beginning of a recession. This marked the end of the longest economic expansion that lasted ten years of rising incomes and employment. Because the longest economic expansion came to an end this led to lower incomes and higher unemployment rates. Employers thus required fewer employees which leads to fewer employed people and a higher unemployment rate. Recessio...